In the view of many participants in our research discussions, character determined the extent to which business leaders pursued high-risk growth strategies in response to the investor community’s relentless pursuit of “more” and the compensation schemes encouraging them. Discussions about character tended to focus on three components: virtues and vices, values, and traits.

In the rush to identify “the” cause of the financial system collapse, many in our study as well as in the mass media were quick to propose that it was the greed of consumers, mortgage brokers, bankers, and others that drove financial leverage to unsustainable heights. Greed (avarice, covetousness, desire for material gain or wealth, without concern for others’ individual or collective needs) was certainly identified as an important factor, by participants in our research study but it did not stand alone. People referred to the other six “deadly sins” as well – pride (excessive belief in one's own abilities, over-confidence, hubris), sloth (laziness, not doing one’s homework), envy (desire for what others have), lust (extravagance or unrestrained excess), gluttony (swallowing too much, literally or metaphorically) and wrath (anger at being exposed, leading to denial of culpability, thereby impeding learning). them.

We would add another trait to this traditional list. While competitiveness is a virtue that one looks for in business leaders, like many virtues it can become a vice when carried to excess. There is evidence that hyper-competitiveness was rampant among many in the financial community and that this was responsible for at least some of the most irresponsible risk-taking that ran many firms into deep trouble. It is certainly a better explanation of why people at the top of these organizations pressed for such incredibly high compensation packages even though they were already personally wealthy. It was less about getting more than it was about getting more than the other person was getting!

Many research participants talked about the virtues of good leaders who did not get caught up in excesses of the last few years, and who had the courage, prudence, wisdom, temperance and sense of proportionality that allowed them to steer clear of investments based on dubious collateral or over-engineered financial instruments with unclear recourse. They also talked about the courage these leaders demonstrated in the extended run up to the financial crisis when many of them lagged their competitors in financial returns and share price performance and were roundly criticized for this.

Personality traits were also cited as playing a role in why leaders appreciated or failed to appreciate the reality of what was happening around them. Narcissism, hedonism and arrogance distort perception while humility, patience, deliberateness and other traits tend to make leaders listen to and appreciate others’ perspectives and consider the consequences of their decisions carefully. We suspect also that it was differences in personal or corporate values, personality traits, or a different sense of accountability and responsibility to their shareholders and clients that made the difference between those that went along with the crowd and those that did not.

Invariably, discussions about character, virtues and vices, traits and values led to discussion of the question, “Can character be taught”? There were many strong views expressed about this, with some arguing character is formed in early years by both nature and nurture. By early adulthood it is what it is. Others took the view that, while the early years are obviously critical, there were many opportunities to help shape character and encourage development of virtuous behaviors throughout one’s life. Clearly many respondents believed the values celebrated or censured in their management education programs and manifested in their early-career mentors, managers and leaders, impacted their own, mature value-frameworks.

Leadership Education and Development

This was a sobering research experience for those of us involved in leadership education and development. In polite but forceful ways we were accused of curriculum deficiencies, of not addressing issues of character and leadership commitment when teaching leadership competencies, not equipping graduates and younger leaders with the ability to learn from history, and not inspiring them to become lifelong learners. One editorial in the Economist went so far as to suggest that business schools “churn out jargon-spewing economic vandals” and need to completely reform our programs and processes.

In the various research group discussions, specific deficiencies were identified in the areas of systems thinking, understanding complex systems, exposure to economic and social history that addresses the causes and consequences of previous economic crisis, and over-reliance on quantitative methodologies. Some mentioned we had spent insufficient time and effort to help people get in touch with their values, to legitimize values as an important element of business decision-making and to help people develop skills they need to be effective advocates for an opposing position.

There was also a sense that business educators we have minimized the importance of strategic analysis, risk assessment, contingency planning and scenario exploration. Within companies, this type of “external” analysis been restricted to so few people – the strategic planning group, for example – that most next-generation leaders were not getting exposure to this way of thinking. The comments about risk management were quite explicit, suggesting that management educators and leadership developers had fragmented the discussion of risk to such an extent that its overall impact on the organization was lost. . This calls for a more integrated perspective on risk and a higher level of proficiency in risk assessment and management.

Our research participants had varying views on the role and responsibilities of educators and how we could make a difference. There was some skepticism and cynicism. Many pointed out these issues had been identified and discussed before. Others were optimistic about the chances of making a difference, especially with next-generation leaders. They thought young people today are more idealistic than previous generations. They believed that if business and management schools focused as much on leadership character as they did on building competencies and if curriculum changed to address many of the issues exposed in this recent crisis, it would make a significant difference to enough people to lessen the chances of a recurrence.

Excerpt from Leadership on Trial: A Manifesto for Leadership Development, copyright Richard Ivey School of Business at the University of Western Ontario, 2010.

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